Fri, Nov 28, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Stratton St and Universal launch UCITS Renminbi Bond Fund

Monday, September 30, 2013
Opalesque Industry Update - Universal-Investment and London based fund manager Stratton Street are launching the Stratton Street UCITS Renminbi Bond Fund UI (ISIN LU0850782243). This new UCITS fund follows the strategy of the long-term successful Renminbi Bond Fund managed since 2007 by Stratton Street, a pioneer in the renminbi sector. The original strategy was set up before the offshore CNH or “dim sum” bond market, and has not yet invested in those bonds as they are illiquid and expensive. Instead at present the fund invests in high quality investment grade Asian bonds and uses currency hedges to gain renminbi exposure.

The original fund has had positive returns every year since launch, and a total return of 87% in its first five years (US dollar A class to end December 2012). This fund is one of the best performing fixed income funds over this period globally and is highly awarded. The new fund is a UCITS vehicle allowing more investors to buy into this successful strategy. Stratton Street has a different approach to most fixed income fund managers. Andrew Seaman, fund manager for the Stratton Street UCITS Renminbi Bond Fund UI says “index based bond funds buy more from the most indebted. We buy from creditors, who can sustain their debts and pay us back.” This investment process has driven the company to focus largely on investing in the high growth creditor nations of Asia, including China. These countries have enough overseas assets to pay back their foreign debts and they are borrowing to invest in their long term growth. Over the long term these net foreign asset positions are associated with currency appreciation, which is why Stratton Street is positive about the long term appreciation prospects for the renminbi. The fund allows investors to benefit from the expected renminbi appreciation and the anticipated opening of China’s capital market.

Stratton Street’s base assumption is that the currency will double in value over the next decade. The fund is relatively low volatility, as the renminbi is a fairly stable currency. Investors can reduce the currency volatility by investing in the different share classes for the euro, sterling and Swiss franc class, leaving only exposure to the appreciation of the renminbi against the dollar. A dollar class is also available, as well as a CNH (offshore renminbi) class for investors who wish to use the fund to get a 2 of 2 higher yield than renminbi deposits. With the bonds held being investment grade, and in many cases government or quasi government the credit risk is relatively low. The fund is suitable for investors who want to take a long term view on the performance of Asia and the Chinese currency while holding good quality assets that provide a steady income.

Stratton St Capital has been profiled in Asia Pacific Intelligence.

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Unlucky Paulson & Co. rebrands $1.6bn Recovery Fund after 13% drop[more]

    From Businessweek.com: A maturing U.S. economic recovery is prompting Paulson & Co. to change course. The $19 billion hedge fund firm, led by billionaire John Paulson, told investors on a conference call this month that the Paulson Recovery Fund will be renamed Paulson Special Situations Fund on Jan

  2. Opalesque Roundtable: Islamic Finance races ahead with Sukuk, the first managed account platform, and foreign demand[more]

    Komfie Manalo, Opalesque Asia: A number of developments took place within Islamic finance in the past years, including the launch of a Islamic managed account platform and the further growth of the sukuk space that saw this instrument evolve from being a type of an ABS security that was rarely

  3. Fund Profile - A complex hedge fund strategy works for United Technologies[more]

    From Institutionalinvestor.com: Reports that portable alpha is dead have been greatly exaggerated, as Mark Twain might have phrased it. Another Connecticut Yankee, giant United Technologies Corp., is gearing up to grow its successful, nearly decade-long portable-alpha program. The UTC strategy took

  4. Opalesque Exclusive: The unintended consequences of Basel III[more]

    Benedicte Gravrand, Opalesque Geneva: Bijesh Amin, co-founder and managing director of Indus Valley Partners (IVP), a technology solutions and services firm focused on the alternative asset management industry, has recently observed

  5. Legal - Six years after AIG takeover, lawsuit reveals another potential buyer[more]

    From Institutional investor.com: When former Treasury secretary Henry (Hank) Paulson Jr. testified in a suit last month about the U.S. government takeover of American International Group, his words were — mostly — numbingly familiar. Explaining the “punitive” terms set for the September 2008 bailout